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VAT & CCLs for Business Energy


We understand it can be tricky organising your business’s finances, especially when covering essential costs such as energy. That’s why our guide is here to explain the VAT and CCLs paid on business gas and electricity tariffs to help you determine if you are eligible for a discount on these costs.

How much VAT do businesses pay for gas and electricity?

Most businesses pay 20% VAT on their gas and electricity bills. Energy suppliers automatically apply VAT to your bills, so if your business is eligible for a discount down to 5% VAT on energy, you need to apply for the VAT reduction separately.

What makes a business eligible for VAT discount on gas and electricity?

To be eligible for the discounted 5% VAT for gas and electricity, you must meet these criteria:

  • 60% or more of your business energy is used for domestic purposes
  • You are a charity or a non-profit organisation

If your usage is low enough, your energy supplier should automatically reduce the VAT amount for you. To be a low gas and electricity user, your business must:

  • Use less than 33 kWh of electricity per day or 1,000kWh per month
  • Use less than 145 kWh of gas per day or 4,397 kWh per month

How do I apply for discounted VAT on business energy?

To apply for discounted VAT on your business energy tariffs, you can use a VAT declaration form. You can get this form from your supplier, and apply for a rebate for the past four years of energy usage. You can apply for your VAT rebate from either your supplier or HMRC.

What is Climate Change Levy (CCL)?

A Climate Change Levy (CCL) is a tax applied to business energy contracts to encourage commercial customers to increase their energy efficiency and reduce their emission levels.

If you are eligible to apply for discounted VAT, you are also likely to qualify for immunity from paying the main rates of CCL

If you are not eligible for immunity from paying the main rates of CCL, you receive a discount on CCL tax by signing a Climate Change Agreement (CCA). The conditions within a CCA mean that when you sign, you are agreeing to make certain alterations to your business to improve its energy usage and reduce its emission levels.

If you require any help with determining your eligibility for the available VAT and CCL discounts, get in touch on 0800 411 8830 and our team will happily advise you.

If you feel you are spending too much on your energy bills, you can start tackling this by comparing a wide range of energy tariffs with our online comparison service. We work with a variety of suppliers and find gas and electricity rates tailored to your business’s usage, so you can feel secure knowing you’re getting the best deal for your business.

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